8. Seven Propositions of Narrative Economics

Robert J. Shiller

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8. Seven Propositions of Narrative Economics

Robert J. Shiller
Robert J. Shiller

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This chapter is in the book Narrative Economics

Chapter 8Seven Propositions of Narrative EconomicsSo far, we’ve seen that popular narratives gone viral have economic con-sequences. Ultimately, we want economists to model this relationship to help anticipate economic events. First, though, we want to offer some basic propositions about economic narratives that we can use to under-stand historically important narratives and to identify new narratives as they develop.Before we begin, let’s review a few key features of economic narra-tives. As the Bitcoin narrative illustrates, an economic narrative re-minds people of facts they might have forgotten, offers an explanation about how things work in the economy, and affects how people think about the justification or purpose of economic actions. The narrative may imply something about the way the world works—in the Bitcoin narrative, the notion that computers are taking over, that we are enter-ing a new cosmopolitan era freed from the perennial problems of local government incompetence and corruption—and how we can use that information to our advantage. Or the narrative may suggest that per-forming a specific economic action is a useful learning experience that will yield possible benefits in the future. Sometimes, performing the economic action is a way of involving ourselves in the narrative itself. By taking part in the narrative, we can say that we are a part of history. For example, by purchasing Bitcoin, we joined the international capi-talist elite.

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Chapter 8Seven Propositions of Narrative EconomicsSo far, we’ve seen that popular narratives gone viral have economic con-sequences. Ultimately, we want economists to model this relationship to help anticipate economic events. First, though, we want to offer some basic propositions about economic narratives that we can use to under-stand historically important narratives and to identify new narratives as they develop.Before we begin, let’s review a few key features of economic narra-tives. As the Bitcoin narrative illustrates, an economic narrative re-minds people of facts they might have forgotten, offers an explanation about how things work in the economy, and affects how people think about the justification or purpose of economic actions. The narrative may imply something about the way the world works—in the Bitcoin narrative, the notion that computers are taking over, that we are enter-ing a new cosmopolitan era freed from the perennial problems of local government incompetence and corruption—and how we can use that information to our advantage. Or the narrative may suggest that per-forming a specific economic action is a useful learning experience that will yield possible benefits in the future. Sometimes, performing the economic action is a way of involving ourselves in the narrative itself. By taking part in the narrative, we can say that we are a part of history. For example, by purchasing Bitcoin, we joined the international capi-talist elite.

You are currently not able to access this content.

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